What dominates the section
- Lending is concentrated in rural electric cooperatives, which accounted for approximately 98% of loans outstanding at May 31, 2025.
- Funding access, interest rates, debt ratings and derivative performance drive liquidity and earnings risk.
- The business also depends on maintaining tax-exempt status and complying with collateral and leverage covenants.
The risks most specific to National Rural Utilities Cooperative Finance
Adverse changes, developments or uncertainties in the rural electric utility industry could adversely impact the operations or financial performance of our member electric cooperatives, which, in turn, could have an adverse impact on our financial results
About 98% of loans are to rural electric cooperatives, so weakness in that single industry could materially hurt CFC’s financial results.
Advances in technology may change the way electricity is generated and transmitted or the way broadband is deployed, which could adversely affect the business operations of our members and negatively impact the credit quality of our loan portfolio and financial results
Solar, wind, microturbines, distributed generation and other technologies could reduce members’ demand for traditional power systems and weaken loan quality.
The nonperformance of our derivative counterparties could impair our financial results
Interest-rate swap counterparties could fail to perform, leaving CFC exposed to interest-rate risk and potential financial losses.
A decline in our credit rating could trigger payments under our derivative agreements, which could impair our financial results
A credit-rating downgrade could trigger termination of certain interest-rate swaps and require payments that impair financial results.
If we are unable to access the capital markets or other external sources for funding, our liquidity position may be negatively affected and we may not have sufficient funds to meet all of our financial obligations as they become due
Loss of capital-market, bank, member-investment or government-supported funding could leave CFC unable to fund loans or meet obligations.
information on our non-GAAP financial measures and a reconciliation to the most comparable U.S. GAAP financial measures
Collateral and leverage covenants require pledged collateral and limit senior indebtedness, potentially constraining financing flexibility.
- Market Risks
Changes in the level and direction of interest rates or our ability to successfully manage interest rate risk could adversely affect our financial results and condition
Interest-rate changes or ineffective derivatives could reduce net interest income, earnings and CFC’s financial condition.
- Market Risks
Our elected directors also serve as officers or directors of certain of our individual member cooperatives, which may result in a potential conflict of interest with respect to loans, guarantees and extensions of credit that we may make to or on behalf of such member cooperatives
Directors who also lead member cooperatives may face conflicts when CFC considers loans, guarantees or credit extensions to those cooperatives.
- Market Risks
Competition from other lenders could adversely impact our financial results
CoBank and other lenders compete for rural utility loans outside the Rural Utilities Service’s lending scope.
- Regulatory and Compliance Risks
If CFC were to lose its status as a 501(c)(4) organization, it would become a taxable cooperative and would be required to pay income tax based on its taxable income. If this event occurred, we would evaluate all options available to modify CFC’s structure and/or operations to minimize any potential tax liability
Losing 501(c)(4) status would make CFC taxable and could also change its exemption from U.S. banking regulation.
All 18 risk factors
Headings as the filing states them, in filing order.
Other
- 01Adverse changes, developments or uncertainties in the rural electric utility industry could adversely impact the operations or financial performance of our member electric cooperatives, which, in turn, could have an adverse impact on our financial results
- 02Advances in technology may change the way electricity is generated and transmitted or the way broadband is deployed, which could adversely affect the business operations of our members and negatively impact the credit quality of our loan portfolio and financial results
- 03We may obtain entities or other assets through foreclosure, which would subject us to the same performance and financial risks as any other owner or operator of similar businesses or assets
- 04The nonperformance of our derivative counterparties could impair our financial results
- 05A decline in our credit rating could trigger payments under our derivative agreements, which could impair our financial results
- 06If we are unable to access the capital markets or other external sources for funding, our liquidity position may be negatively affected and we may not have sufficient funds to meet all of our financial obligations as they become due
- 07A reduction in the credit ratings for our debt could adversely affect our liquidity and/or cost of debt
- 08information on our non-GAAP financial measures and a reconciliation to the most comparable U.S. GAAP financial measures
Market Risks
- 09Changes in the level and direction of interest rates or our ability to successfully manage interest rate risk could adversely affect our financial results and condition
- 10Damage to our reputation could harm our business, including our ability to attract highly skilled employees and our competitive position
- 11Cybersecurity incidents affecting our information technology systems, or those managed by third parties, may damage relationships with our members or subject us to reputational, financial, legal or operational consequences
- 12Our elected directors also serve as officers or directors of certain of our individual member cooperatives, which may result in a potential conflict of interest with respect to loans, guarantees and extensions of credit that we may make to or on behalf of such member cooperatives
- 13Natural or man-made disasters, including widespread health emergencies, or other external events beyond our control such as acts of terrorism or war, could disrupt our business and adversely affect our results of operations and financial condition
- 14Competition from other lenders could adversely impact our financial results
- 15The failure to attract, retain or motivate highly skilled and qualified employees could impair our ability to successfully execute our strategic plan and otherwise adversely affect our business
Regulatory and Compliance Risks
- 16Loss of our tax-exempt status could adversely affect our earnings
- 17If CFC were to lose its status as a 501(c)(4) organization, it would become a taxable cooperative and would be required to pay income tax based on its taxable income. If this event occurred, we would evaluate all options available to modify CFC’s structure and/or operations to minimize any potential tax liability
- 18Changes in accounting standards or assumptions in applying accounting policies could materially impact our financial statements
Other National Rural Utilities Cooperative Finance 10-Ks
- 2026 10-K risk factors
18 risks. 98% of loans are to rural electric cooperatives, concentrating results in one industry.
Filed Jul 31, 2026
About this page
Item 1A of the 10-K on EDGAR was split into its risk factors and, where the company's previous 10-K is on file, each heading was matched to last year's and the text compared word for word. The headings are the filing's own. The one-line readings and the overview were written by a language model from the text of the new, dropped, and rewritten risks; they refer to risks by position and cannot misquote a heading.